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Series 2 Episode 06 – How to start investing by setting financial intentions

I’m really excited to introduce Pete Matthew in this week’s episode. Pete and I met at a conference recently, and he gave me some really great advice about the podcast. Pete is a fellow advocate of being intentional with money and setting financial intentions.

In Pete’s own words, Pete is a 21 year veteran financial planner and managing director of Jackson’s Wealth Management in a beautiful part of the country; Penzance. 9 years ago, Pete started shooting some explainer videos, which has now transformed into this huge beast with hundreds of videos and an award winning podcast with millions of downloads. Pete also released a book last year called The Meaningful Money Handbook.

Pete and I really dig deep into the basics of financial intentions. One of the things Pete is really focused on is being intentional with money, which is something I also talk about a lot here and within my community. Pete and I talk about;

Listen to the interview

Welcome Pete, can you tell us a bit about yourself and how you started podcasting?

So I’m a 21 year finance veteran, I live in Penzance with my wife and 2 daughters. In 2009, 3 entirely different things happened to come together at the same time which was kind of the catalyst for getting started with the Meaningful Money podcast. The first was that people in various different areas of my life were telling me that I was good at explaining things. When enough people are telling you the same thing, it sort of starts to sink in! The second thing was that I’d got to a stage in my career where I was in love with financial planning as opposed to product sales, and I could see the difference that could make to people and really wanted to amplify the amount of people I could serve. The third thing was that I read a book by Gary Vaynerchuk called Crush It!. The premise of his book was that if you have a message to get out to the world and you’re consistent with it, people will show up.

So I bought a small camera, and I started recording myself explaining things about money. I shot nearly 300 videos over the course of around 2.5 years, eventually putting them out to the world early in 2010. By mid to late 2012 I’d fallen in love with podcasting as a listener. I’d started listening to the likes of Pat Flynn’s Smart Passive Income and Michael Hyatt’s Lead to Win, and found that these podcasts were hugely benefitting me personally. So I fell in love with the medium of podcasting and decided to have a go. I messed around with it for about 6 months, recorded about 13 episodes in that time, and then decided I needed to get really serious about it. So I decided to put an episode out weekly, and it really just went crazy from there. Now we’re at over 2.5 million downloads and number 1 in the UK iTunes business charts, and it’s become this massive part of my life which was never really my intention when I started, but I feel extremely grateful for it.

What was the moment for you when you realised you wanted to educate people about money?

A key part of my life was sitting the certified financial planner license, which at the time was the only real qualification which taught you how to apply the principles of financial planning to real life situations. And this was really a light bulb moment for me; this is what it’s really about. It’s about helping people identify their goals and their dreams and helping them organise their finances to match that.

I love to teach; teaching is in my blood. My dad was a teacher for the first half of his career before becoming a minister in a Pentecostal church. My dad was a real teacher and scholar, and had a knack for explaining and teaching in a way that just made sense. So I was really raised in an environment where teaching and explanation was natural.

Did your parents talk to you about money growing up?

Very much no! Dad was a minister in a small church, so he didn’t get paid loads. My parents were very good with money, and always had enough to give us a good upbringing and provide the things we needed, as well as being able to give (charitably) generously. But it was never discussed. Whenever I asked a question about money, for example “how much do you earn dad?” or “how much did the car cost?” the answer without exception would always be “that’s none of your business son”. So money was very much a taboo subject.

So as a teenager when I got my first job, I remember my Mum saying we should go into town because I needed new trainers, and suggesting I could contribute with my earnings. And I didn’t have any, nor could I tell her where it had all gone because I just didn’t know. Without those early lessons around money, I just didn’t engage with my money when I started to have some of my own.

It’s very much something I’ve tried to differently with my own children; money needs to be an open subject not just between couples and adults but with our kids too. An open dialogue about money I believe will serve all parties really well.

So how do you do that with your kids?

My 2 daughters are 19 and 16 now, so we’ve just opened a proper current account for my youngest. But before that both girls had GoHenry accounts, which is essentially a pre-paid debit card with a ton of functions that are so useful to help teach kids how to manage their own money. I’ve never been afraid to tell my kids what I earn or how much things cost, and have been very careful not to use negative language around money such as “we can’t afford that”.

Money is just a part of life, and should be just an open conversation with our kids as things like how to be careful on social media are. It doesn’t need to be a taboo subject.

In your book, you talk about financial ‘intentions’. Why do you use that particular word?

The thing about money is you have to be proactive and positive about it. If you are passive and negative about it it will rule you rather than you being in control. With any tool you use you need to learn how to use it, have a plan about how you’re going to use it, and then use it. Money is a tool. Whatever you choose to do with your money; if you choose to leave it in the bank because you don’t need to invest it because you’re planning on spending it on something in 18 months, that’s fine because it’s an intentional decision.

Not thinking it through at all, though, is passive. Being intentional is just about having a reason for everything. Whatever your decisions are, make them decisions and not just the default action. That what I mean about being intentional and having financial intentions.

How to Start Investing by Setting Financial Intentions with Pete Matthew of Meaningful Money

Often with investing, people know that they should be doing it but just don’t where to start.

Sure. If you look at all the tools available, often it’s just so confusing and the easier option is just to blank it out. We don’t teach this stuff; I mean there’s no point teaching 14 year olds about investing I think that’s too early. I think we need to meet people where they are. And I think there are things we need to teach people to have in place before they start;

  • Make sure you have ‘emergency’ funds set aside
  • Work on basic financial bases like budgeting first
  • Look at things like basic life insurance
  • Ensure you’re not building on a shaky foundation

We need to teach people how to do this stuff, but we need to take them through it gently, almost step by step. Teach people to swim first rather than just throwing them in the deep end and expecting them to swim.

With that in mind, you’re a big believer in the core and satellite approach. Can you tell us a bit more about that?

Investing can be as simple or as complex as you want it to be. No one needs a complex investment process. At its most simple, investing is buying stuff that will go up in value over time.

So if you hold £1 in a bank account, it will always be worth £1. It might shoot off some interest, but those are new pounds and pence. And actually over time your £1 will be worth less because of inflation. So if we’re going to grow our money, that’s where investing comes in. For most people that means shares (which a lot of people find terrifying) or property.

Investing just needs to be kept simple, mostly because people have lives! So if we’re looking to buy something that is going to increase in value, for most of us that means shares. Now the problem with shares is that there are more types than you could ever possibly imagine.I want to divert a little briefly and talk quickly about active and passive investing.

If we look at something like the FTSE100, which is simply the top performing 100 companies in the UK stock market; an active investor would look at those companies and then pick some to buy shares in based on which they think they are good companies to invest in. But if we’re saying shares a good place to be putting our money, why not just buy shares in all of those 100 companies? The chances are there will be more winners than losers, and share markets relentlessly increase in value. It won’t be a straight line, and there will be rocky times along the way, but one of my favourite sayings from Nick Murray is “declines are temporary, but the advance is permanent”. Stock markets always go up if given long enough.

A passive investor will buy into a fund that simply incorporates all of the companies. It’s less complex, and is usually cheaper too. In my opinion, most people just need to buy into a good tracker fund that invests in lots of companies around the world for them.

The reason I’m talking about passive and active investing is because this type of passive or fund investing is what I’d call the ‘core’ of investing. For people who have more of an interest in going deeper, this is when I then start to talk about the ‘satellite’ approach. So around the sides of the core investment you might want to have some fun and dabble a bit in buying single shares in companies you think might do well.

The core investment approach is what’s going to make you the real long term money, while the satellite is really the stuff around the sides where you might want to have more input. The core investment is the consistent element, and so it is element that most people really need to be thinking about.

You’ve talked before about multi-asset investing, could you talk us through what that is?

Sure. It sounds complicated, but it really isn’t. When we talk about shares, they are an asset class. So they are just one of the types of asset you can buy to grow your money. Bonds are another, then you have things like property and commodities. The concept of multi-asset investing is that there are funds out there which combine some or all of these different asset classes. The beauty of this is that just like share investment funds they are done for you investment portfolios.

So let’s assume you’ve convinced our readers and they’re ready to start investing, where should they start with their investment journey?

If you want to understand the principles of investing, I really recommend a book called ‘Investing Demystified’ by Lars Kroijer. Lars used to run a hedge fund which is a super risky form if investing, really at the deep end. And he now very much talks about the total opposite to that; the passive investing that we have been talking about today.

Educate yourself, listen to podcasts and make sure it’s relevant to the country you’re in. There’s plenty of stuff available out there, but always go into things with your eyes open.

One of the questions I get asked very often is “What happens if I make the wrong decision?”

Almost no decision you make is set in stone or do irreparable damage. You can always pivot, change, and learn lessons and readdress things. And that’s why it’s so important to start earlier than later, because then you’ve got time to make mistakes and learn from them, which we all do.

Are there any specific mistakes you’ve made financially that you are able to look back on now and think about what you would have done differently?

I remember being just terrible with money all the way through my early and student years. For the first few years of my marriage, I completely abdicated to her financially. My wife is fantastic with money, and I realised that if money wasn’t my strong point that I needed to use the people around me to help to educate myself. To this day we very much handle all of the household finances as a partnership, and I really do owe so much of my journey to my wife. I asked her for help when I needed it, and she was there to give that help.

Bearing in mind the huge wealth of experience you have, are there any top tips you’d like to leave us with today?

Where to start! For me, the distillation of financial success for me is these 3 steps;

  • Spend less than you earn
  • Insure against disaster
  • Invest wisely

That really is it, in a nutshell.

Resources:

Book in a complimentary call to discuss how financial coaching can help you move from financial overwhelm to confidence and control. 

Join Catherine’s Facebook Page and FREE Facebook Group

My Website 

My Online Courses – From Spender to Saver, Investing for beginners from £1

My YouTube Channel 

Connect with me on TwitterInstagram and Facebook 

Listen to Pete’s podcast – Meaningful Money

Follow Pete on Twitter

Dave Ramsey – 7 Baby Steps to Financial Freedom

Podcasts

Pat Flynn’s Smart Passive Income

Michael Hyatt’s Lead to Win

Books

Gary Vaynerchuk – Crush It!

Gary Vaynerchuk – Crushing It!

Pete’s book – The Meaningful Money Handbook: Everything you need to KNOW and everything you need to DO to secure your financial future

What are your thoughts?

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